Publications:
"Treatment and referral decisions under different physician payment mechanisms" with Marie Allard (HEC Montréal) and Izabela Jelovac (GATE), Journal of Health Economics, forthcoming.
In this paper, we propose a theoretical model where health can evolve over time and where GPs differ in their diagnosis ability and level of altruism. In our model, certain types of illnesses, which may or may not require specialty care, are assumed to be diagnosed with potential error - where the diagnostic precision depends on the GP's diagnostic ability. Finally, we assume that certain types of illnesses may worsen over time if they are not treated with appropriate care. We solve for the GP's treatment and referral decisions which maximize the patient's expected utility (subject to GPs' and specialists' participation constraints) as a function of the GP's diagnostic ability (what we call the First-Best outcome). We then consider three common types of physician payment mechanisms: fee-for-service, capitation and fundholding. For each, we derive the GPs' expected utility maximizing treatment and referral decisions as a function of their diagnostic ability and altruism level. For each payment mechanism we compare the treatment and referral decisions of different types of physicians to those derived under the First-Best. Finally, we examine GPs' behavior across different types of payment mechanisms in order to identify which one yields the "best" outcomes.
"Self-Selection in Migration and Returns to Unobservables" with Benoit Dostie, 2009, Journal of Population Economics 22, 1005-1024.
We build a model of migration which considers both observable and unobservable individual characteristics and their returns across locations. We focus on the interprovincial migration patterns of Canadian physicians, in part, because physicians are paid on a fee-for-service basis. Because fees are exogenous, we can estimate a mixed conditional-logit model to determine the effects of individual and destination-specific characteristics (particularly earnings differentials) on physician location decisions. We find, among other things, that individuals with greater earnings potential based on unobservables are more likely to migrate to provinces where the returns to such unobservables are greater.
"Provider Competition in a Dynamic Setting" with Marie Allard and Lise Rochaix, 2009, Journal of Economics and Management Strategy, 457-86.
We examine provider and patient behaviour in a dynamic model where effort is non-contractible, competition between providers is modeled in an explicit way and where patients' outside options are solved for in equilibrium. Physicians are characterized by an individual-specific ethical constraint which allows for unobserved heterogeneity. This introduces uncertainty in the patient's expected treatment if he were to leave his current physician to seek care elsewhere. We also introduce switching costs and uncertainty in the treatment-outcome relationship. Our model generates equilibria with treatment heterogeneity, unstable physician-patient relationships, and over-treatment (a form of defensive medicine).
"Estimating differences between male and female physicians service provision using panel data" with Alexandra Constant (2008) Health Economics, 17: 1295-1315.
Using panel data, we estimate the impact of an increasing share of female physicians on the total output of Canadian physicians. A micro-econometric model is developed specifically for the Canadian context and estimated using administrative data on all Canadian physicians paid on a fee-for-service basis from 1989 to 1998. Our results suggest that female physicians systematically provide fewer services than their male counterparts for almost all specialties and provinces studied. Given that females account for an increasing share of the physician population and that female physicians provide, on average, fewer services, potentially important future reductions in total health-care service provision are likely
Physician Payment Mechanisms (Chapter 6) (2008) in Financing Health Care: New Ideas for a Changing Society (Ed: Lu, M. and E. Jonsson) (Wiley-VCH Press), 149-176.
In this chapter I examine different payment systems directed at physicians and their likely effects on physician behaviour and patient well-being. Before doing so, I present a general framework and describe the efficient provision of medical services and the first-best insurance contract. The first physician payment mechanism that we present is the traditional fee-for-service (or cost-reimbursement) payment mechanism, where physicians are paid for each service they provide and bear no financial risk. I then examine pre-payment systems such as capitation and fully-prospective payments. In these settings, physicians are paid a given amount for each patient they enlist into their practice or for each patient they treat, while subsequently bearing all costs associated with treatment. Finally, I examine mixed-payment systems, where physicians receive a given amount for each patient they treat as well as a partial reimbursement of costs. For each physician payment mechanism, I examine the incentives they create, including how they are likely to affect the provision of medical services, physician referral decisions and patient selection. I also discuss how results are likely to change when considering such things as information asymmetry, provider altruism and diagnostic ability, physician monitoring and medical malpractice, and competition between providers. Although this chapter focuses on the theoretical foundations of physician payment mechanisms, I discuss related empirical findings throughout.
"The Cost of Schizophrenia: Lessons from an International Comparison" with Åke Blomqvist and Jeffrey Hoch (2006), Journal of Mental Health Policy and Economics 9, 177-183. .
This paper reviews three key studies of the cost of schizophrenia in Canada, the United States and the United Kingdom with an emphasis on a US-Canada comparison. The detailed focus allows for an in-depth study of the factors that lead to different cost estimates. A secondary aim of this paper is to illustrate the importance of direct and indirect costs in the measurement of economic burden.
"The Living Arrangement Dynamics of Sick, Elderly Individuals" with Benoit Dostie (2005), Journal of Human Resources (40), 989-1014.
In this paper, we model the dynamics associated with living-arrangement decisions of sick, elderly individuals. Using data from the Panel Study of Income Dynamics' Parental Health Supplement, we construct the complete living-arrangement histories of elderly individuals in need of care. We use a simultaneous random-effects competing-risks model to analyze the impact of demographic characteristics, health and wealth on the living-arrangement decisions of sick elderly individuals while taking into account state and duration dependence as well as unobserved heterogeneity. We find, among other things, that the individual's current living arrangement as well as the time spent in that living arrangement serve as important predictors of future living-arrangement choices of sick elderly individuals.
"Information asymmetry, insurance and the decision to hospitalize" with Åke Blomqvist (2005), Journal of Health Economics, 24: 775-793.
We analyze the problem of second-best optimal health insurance in the context of a model in which patients and doctors must decide not only on an aggregate quantity of health services to use in treating various kinds of illness, but also have a choice between different kinds of providers (in particular, outpatient services rendered by primary-care physicians or inpatient services provided by hospital-based specialists). We consider well-informed patients' choices of provider when they have conventional insurance so they only pay part of the cost of their health services, as well as the equilibrium strategies of doctors and patients when there is patient-provider asymmetry; in the latter case we also analyze a managed-care insurance setup under which doctors are paid by capitation. We find that under certain plausible conditions, second-best optimal managed-care plans with supply-side incentives dominate second-best optimal conventional plans that rely on cost control through demand-side cost sharing.
"Determinants of Physicians' Decisions to Specialize," with Robert Gagné (2005) Health Economics, 14: 721-735.
In this paper, we study physician specialty decisions using several unique data sets which include information on almost all Canadian physicians who practised in Canada between 1989 and 1998. Unlike previous studies, we use a truly exogenous measure of potential income across general and specialty medicine to estimate the effect of income on physicians' specialty choices. Furthermore, our estimation procedure allows us to purge the income-effect estimates of non-pecuniary specialty attributes which may be correlated with higher paying specialties. Understanding the effect of potential income (and other variables) on choices is necessary if the desired mix across generalists and specialists as well as across specialties is to be achieved. Our results show that physicians respond to differences in income when making their specialty decisions.
"The impact of health care cost increases on fraud and waste," with Martin Boyer (2005) Assurance et Gestion des Risques / Insurance and Risk Management, 73, 5-29.
In a model of imperfect information with costly auditing, we examine the effect of increases in health-care costs and general inflation on the optimal health-insurance policy and on waste. We show that in such a setting, individuals will buy more than full insurance. Moreover, as the cost of medical care increases, consumers (i.e., patients) are less likely to file unjustified claims while insurance providers audit with a lower probability. As a result, waste associated with costly auditing is reduced. We also show that a general increase in the opportunity cost of illness (reflected through lost earnings due to illness) also decreases waste, but not as much as health-care cost increases
"Quality control mechanisms under capitation payment for medical services," Canadian Journal of Economics 33, 2000, 564-586.
As a result of rising health care costs, many countries, including the United States, have turned to managed care organizations and the use of capitation payment systems. Although this type of system is an effective mechanism for reducing excessive utilization of health care, it may lead to the underprovision of medical services. In this paper propensity to underprovide medical services in a prepayment system as well as the effects of auditing/monitoring on physician behaviour and patient well-being are examined. Conditions are found under which managed care yields more efficient outcomes than traditional fee-for-service care.
Some other papers and work in progress:
"Standardization under group incentives" with Jonathan Ketcham (Arizona State) and Claudio Lucarelli (Cornell) (coming very soon).
In this paper, we theoretically demonstrate that individual incentives for workers result in utilization of inputs that may diverge from the firm's optimal utilization of inputs. We then show how the introduction of a group incentives can cause their decisions to move toward the firm's optimal utilization and we contrast this with various alternative individual incentive designs. Following that we adapt the model to incorporate the specific design of a group incentive that hospitals have recently used for non-employee physicians. That is, we examine the hospital and physician environment as a case study of this specific form of a principal-agent framework where inputs are determined by the agent but paid for by the principal. This yields specific predictions about the mechanisms by which group incentives reduce the hospitals' costs and promote standardization among the physicians. We test the results from the model using data from specific gainsharing programs that have been implemented in cardiology. We also extend the model to consider how group incentives' effects vary with important group characteristics.
"The Incentive and Productivity Effects of Training Older Workers" with Benoit Dostie (HEC Montréal), submitted.
We use longitudinal linked employer-employee data and find that the probability of participating in firm-sponsored classroom training diminishes rapidly for workers aged 45 years and older. Although the standard human capital investment model predicts such a decline, we also consider the possibility that returns to training decline with age. Taking into account endogenous training decisions, we find that the training wage premium diminishes only slightly with age. However, estimates of the impact of training on productivity decrease dramatically with age, suggesting that incentives for firms to invest in classroom training are much lower for older workers.
"Strategic behavior in teams" with Jonathan Ketcham (Arizona State) and Claudio Lucarelli (Cornell)
"Explaining the geographical variations in 'medicare' healthcare provision" with Roger Feldman (Minnesota) Gautam Gowrisankaran (Arizona) and Bob Town (Minnesota)
"The effect of drug-drug interactions on the consumption for medical services in the presence of self-selection and measurement error" with Marie-France Witty (ETMIS).
"Can High Quality Physicians Lower Future Healthcare Costs: Evidence from Randomized Assignment in Hospital Emergency Departments" with Gautam Gowrisankaran (Arizona).
"Parental Illness and the Labour Supply of Adult Children", 2004.